Culled—Proshare

July 29, 2020

By CardinalStone Research

Ecobank Transnational Incorporated (ETI: TP – N5.72: BUY) result highlights:

• Earnings fell 8.0% dragged by higher net impairments (+29.4% QoQ) and weaker non-interest income (-13.3% QoQ)

• Credit-related impairments rose 28.6% QoQ to $74.5 million, reflecting the impact of the pandemic on credit quality. To this point, cost of risk rose to 1.7% (Q1’20: 1.5% ). NPL ratio eased slightly to 9.8% (Q1’20: 9.9%) likely due to loan write-offs during the period

• Non-interest income fell 13.3% weighed by weaknesses in fee income (-8.0% QoQ) and Net trading gains (-30.4% QoQ)

• Positively, net interest income (+4.7% QoQ) and operating expenses (-9.5% QoQ) provided support for performance during the review quarter

• Gross loans fell 1.9% while deposits improved 3.8% relative to Q1’20

• Across regions, the lender’s Nigeria business recorded a remarkable 2.7x QoQ increase in earnings (3.8x earnings growth ex-currency translation impact), supported by higher net interest income and recoveries

• Also, the Francophone West Africa (UEMOA) and Anglophone West Africa (AWA) businesses grew earnings by 15.4% and 1.8% respectively, while the Central, Eastern and Southern Africa (CESA) business saw earnings contract by 33.5%.